Pricing Strategies
A business develops the pricing strategy for a product after performing a marketing analysis. Product distribution, positioning and promotional decisions are made and demand is estimated. A pricing strategy is formulated taking into consideration factors of cost, competitors and profit objectives.
Possible pricing strategies include a full price strategy, competitive pricing, discount pricing or a mix of these. A full price, or skim pricing strategy is appropriate for specialty products and exclusive markets. A full price strategy usually results in fewer sales at a higher profit margin. Competitive pricing is appropriate for high-quality products sold in a retail setting. It requires constant monitoring to ensure that the pricing is comparable to similar products in the market.